BEIJING (Reuters) – China’s financial technology companies are expected to meet capital adequacy requirements within a maximum of two years, said Guo Shuqing, head of the China Banking and Insurance Regulatory Commission (CBIRC) on Tuesday.
Micro-lenders, consumer finance companies and Internet-powered banks should all have enough capital like other financial institutions, Guo told a news conference.
Chinese financial regulators have launched a number of measures since last year to tighten supervision of online lending methods in the country, especially technology companies that want to expand into the financial space and move away from their once laissez-faire strategy.
The unit made Ant Group’s IPO of $ 37 billion last year and has seen Alibaba’s fintech subsidiaries formulate plans to move to a financial holding company structure.
“Starting a business needs capital, it’s also starting a financial business,” Guo said.
“As long as Internet platforms conduct financial activities, the capital adequacy requirement on them should be the same as financial institutions.”
According to Guo, financial regulators have set different respite periods for different internet platforms. Some have until the end of 2020 and others until the middle of 2021 to meet the capital adequacy requirements, he said.
“But a maximum of two years (capital adequacy for) all platforms should be on track,” Guo added.
Regarding Ant Group’s restructuring, Guo said that there were no restrictions on the financial business it was developing but that all its financial activities should be regulated by law.
Ant Group is in talks with other shareholders in its new consumer finance unit to strengthen the company’s capital as the fintech giant prepares to invest in its lucrative micro-lending operations, Reuters reported last week.
It would need an additional capital of 30 billion yuan ($ 4.64 billion) to meet regulatory requirements, according to the report.
($ 1 = 6.4714 Chinese yuan)
Reporting by Tina Qiao, Cheng Leng and Ryan Woo in Beijing; See Young Lee in Washington; Edited by Christian Schmollinger and Ana Nicolaci da Costa